'Wrench attacks' subject some cryptocurrency holders to violence, kidnapping

Police in two cases in the United States, and one in France, allege that brutal assaults were tied to cryptocurrency-related crimes that have spilled out from behind computer screens and into the real world as the largely unregulated currency surges in value. 

The alleged attempted robberies fall into a category often described as a “wrench attack.” It’s a name popularized by an online comic that mocked how easily high-tech security can be undone by hitting someone with a wrench until they give up passwords.

Wrench attacks are on the rise thanks in part to cryptocurrency’s move into mainstream finance, Phil Ariss of the crypto tracing firm TRM Labs said in a recent blog post.

Violence may be increasing for several reasons including that criminals believe they can get away with crypto theft because transactions are hard to trace and often cloaked by anonymity, TRM says.

“As long as there’s a viable route to launder or liquidate stolen assets, it makes little difference to the offender whether the target is a high-value watch or a crypto wallet,” Ariss said. “Cryptocurrency is now firmly in the mainstream, and as a result, our traditional understanding of physical threat and robbery needs to evolve accordingly.”

In Canada, a Toronto cryptocurrency company CEO was briefly held for ransom late last year, while Montreal police are investigating last year’s homicide of a 24-year-old cryptocurrency influencer. In both cases, police have been tight-lipped regarding the details or possible motives surrounding the crimes.

Here’s a look at some of the recent, high-profile international cases:

Manhattan townhouse captivity alleged

In the New York case, two American crypto investors — John Woeltz and William Duplessie — have been arrested on kidnapping and assault charges in recent days after a 28-year-old Italian man told police they tortured him to get his Bitcoin password. Attorneys for both men declined to comment.

Authorities said Duplessie and Woeltz lured the victim on May 6 to an eight-bedroom townhouse in the Soho district of Manhattan, one of the city’s most expensive neighbourhoods.

Over the next 17 days, the man told police he was bound by the wrists, shocked with electrical wires, pistol-whipped, cut on the leg with a saw and forced to smoke from a crack pipe. At one point, he said, he was dangled from the home’s top flight of stairs.

Believing he would soon be killed, the victim said he agreed Friday morning to give the men access to the password.

But as the men went to retrieve his computer, the victim was able to escape from the home and flag down a traffic agent on the street outside.

A search of the townhouse turned up a trove of evidence, prosecutors said, including cocaine, a saw, chicken wire, body armour, night vision goggles, ammunition and Polaroid photos of the victim with a gun pointed to his head and a crack pipe in his mouth.

The victim was hospitalized with injuries to his wrists consistent with being bound, cuts to his face and other injuries, authorities said.

Both Duplessie and Woeltz appear to be entrepreneurs focused on cryptocurrency. In online profiles, Duplessie is listed as the co-founder and head of sourcing at Pangea Blockchain Fund and an investor in other blockchain-based companies. An email seeking comment was sent to Pangea.

Woeltz has described himself in interviews as a blockchain investor who spent time in Silicon Valley before becoming involved in Kentucky’s burgeoning crypto-mining industry.

Lamborghini hijacking in Connecticut

While the allegations are still emerging, earlier this year 13 people were indicted on federal charges in Washington, D.C., accused of combining computer hacking and money laundering with old-fashioned impersonation and burglary to steal more than $260 million US from victims’ cryptocurrency accounts.

Some are accused of hacking websites and servers to steal cryptocurrency databases and identify targets, but others are alleged to have broken into victims’ homes to steal their “hardware wallets” — devices that provide access to their crypto accounts.

The case stemmed from an investigation that started after a couple in Danbury, Ct., last year were forced out of a Lamborghini SUV, assaulted and bound in the back of a van. An off-duty FBI agent just happened to be in the area at the time and helped police track the movements of the suspects’ vehicle, according to a longform feature on the case from New York Times Magazine.

Authorities allege the incident was a ransom plot targeting the couple’s son — who they say helped steal more than $240 million US worth of Bitcoin from a single victim.

The son has not been charged, but is being detained on an unspecified “federal misdemeanour offence” charge, according to online jail records. Police stopped the carjacking and arrested six men.

Spate of incidents in France

Meanwhile in France, kidnappings of wealthy cryptocurrency holders and their relatives in ransom plots have spooked the industry.

Attackers recently kidnapped the father of a crypto entrepreneur while he was out walking his dog, and sent videos to the son including one showing the dad’s finger being severed as they demanded millions of euros in ransom, prosecutors allege. Police freed the father and arrested several suspects.

Earlier this year, men in masks attempted to drag the daughter of Pierre Noizat, the CEO and a founder of the bitcoin exchange platform Paymium, into a van, but were thwarted by a shopkeeper armed with a fire extinguisher. Noizat told a French television network that his son-in-law needed stitches as a result of the attack, and he implored authorities to do more to prevent targeted attacks.

And in January, the co-founder of French crypto-wallet firm Ledger, David Balland, and his wife were also kidnapped for ransom from their home in the Cher region of central France. They also were rescued by police and 10 people were arrested.

French Interior Minister Bruno Retailleau recently said security will be beefed up for crypto entrepreneurs and their families, with offers of security briefings by elite police units, priority access to emergency services and police checks of their home security.